Software services firm Tech Mahindra today said it will acquire UK-based Target Group in around 120 million pound deal to strengthen its presence in the banking and financial services space.

“The 100 per cent acquisition strengthens Tech Mahindra’s BFSI practice by access to IP and a platform which helps automate end-to-end processes in the lending, investments and insurance market,” Tech Mahindra said in a statement.

The acquisition will allow Tech Mahindra to capture a larger share of the 45-60 billion pound annual spend by UK BFSI companies on software and services, it added.

“The valuation is an enterprise value of GBP 112 million and an adjustment for surplus cash of up to GBP 8 million.

Tech Mahindra will pay an amount of up to 64 million upfront and a 2017 deferred consideration of up to GBP 16.28 million,” it said.

Tech Mahindra will also payback an amount of GBP 17.1 million on account of loan notes at closing. In addition, the management is rolling over 7.6 per cent of their equity value into the company (worth GBP 6.8 mn) which will be paid out in 2020 as a second deferred consideration.

As part of the composite deal the Indian firm shall provide a corporate guarantee not exceeding GBP 30 million in relation to the payout in 2020.

“Target Group will remain a standalone entity retaining its existing brand… The entire management team at Target will stay with the business and continue to have full operational responsibility,” it said.

The transaction is expected to close in the second quarter of the ongoing fiscal, subject to the receipt of regulatory approvals.

Synergies include expansion of the platform to other global markets, and significant cross-selling opportunities, it said.

“This acquisition will make us a formidable player in the UK BFSI market with over 50 major financial institutions as clients. The acquisition lies at the confluence of several of our strategic priorities – add IP, double BFSI revenue and expand European footprint,” Tech Mahindra MD and CEO CP Gurnani said.